Falling palm oil prices increase pressure on sunflower and sunflower oil prices in Ukraine

Palm oil prices fell 9.6% last week, and have lost 15.6% overall in two weeks amid declining export demand.

According to surveyors, Malaysia reduced its exports of palm oil products by 7.6-8.3% between December 1 and 20 compared to the same period in November, and in the next 10 days, against the backdrop of the New Year holidays, it will decrease even more.

On the Bursa exchange, February palm oil futures fell 1.6% to 4,434 ringgit/t or $984/t (-9.6% for the week), and the benchmark FCPO1 palm oil contract for March delivery fell 1.64% or 74 ringgit/t to 4,434 ringgit/t ($983.24/t) on Friday.

Following them and against the backdrop of favorable weather for soybean planting in Brazil, January soybean oil futures in Chicago fell by 7.8% to $870/t in a week (-8.9% in two weeks).

According to Trading Economics, the average price of sunflower oil delivered to buyers fell by 1.5% to $1,261/t (-3.6% in two weeks) over the week. The number of offers remains limited, as sellers are not ready to lower prices to the level of soybean and palm oil prices and hope for the restoration of the traditional premium for sunflower oil.

In Ukraine, the demand prices for sunflower oil with delivery to the Black Sea ports have fallen to $1,070-1,090/t, and to Bulgaria or Poland – to $1,100-1,150/t, but with delivery only in January-February. Currently, there is no acceptance due to the overcrowding of the market and the holidays.

Sunflower demand prices fell by another 800-1000 UAH/t to 24,000-25,000 UAH/t during the week amid falling oil prices, but farmers are holding back sales and selling barley and corn, the prices of which continue to rise.

In anticipation of market stabilization and increased sunflower supplies, factories have stopped processing or switched to processing soybeans.

The Ukroliyaprom Association calls on farmers to accelerate the sale of sunflower, as its prices, according to experts, are unreasonably high in Ukraine. While prices for sunflower oil on the world market have increased by $130/t over the year, sunflower has risen in price by almost $250/t over this period.

The association reminds that sunflower is not a crop that determines price trends. The formation of prices on world oilseed markets is most influenced by palm and soybean oil, whose share in world production is 40% and 30%, respectively, while the share of rapeseed oil is 15% and sunflower oil is only 9%.

The reduction in sunflower oil production on the world market is partially offset by soybean oil, which has recently become the cheapest and continues to lose price. Therefore, an increase in the world soybean harvest in the current season will lead to an adjustment in prices for all types of oils, in particular, it may reduce prices for sunflower oil, the association believes.